Deutsche Bank Concedes a Settlement For Widespread Rigging of the Price of Silver (And Gold)

It appears that with the regulators either asleep or blithely ignoring blatant price manipulation in the precious metals, it remains for private parties to bring suit for the damages by these banksters in the 'free markets.'

As I recall, the CFTC conducted a three year study of the silver market, and finally came out with a simple comment that 'there is no evidence of manipulation.'

The Banks named in this private lawsuit in US Federal Court were Deutsche Bank, Bank of Nova Scotia,  HSBC, and UBS AG.

Postscript:  Apparently Deutsche Bank is also admitting to gold price manipulation, and is willing to name names of accomplices as noted here.

Reuters
Wed Apr 13, 2016 7:09pm EDT
Deutsche Bank to settle U.S. silver price-fixing litigation

Deutsche Bank AG has agreed to settle U.S. litigation over allegations it illegally conspired with Bank of Nova Scotia and HSBC Holdings Plc to fix silver prices at the expense of investors, a court filing on Wednesday showed.

Terms were not disclosed, but the accord will include a monetary payment by the German bank, a letter filed in Manhattan federal court by lawyers for the investors said.

Deutsche Bank has signed a binding settlement term sheet, and is negotiating a formal settlement agreement to be submitted for approval by U.S. District Judge Valerie Caproni, who oversees the litigation.

A Deutsche Bank spokeswoman declined to comment. Lawyers for the investors did not immediately respond to requests for comment.

Investors accused Deutsche Bank, HSBC and ScotiaBank of abusing their power as three of the world's largest silver bullion banks to dictate the price of silver through a secret, once-a-day meeting known as the Silver Fix.

According to the lawsuit, the defendants distorted prices on the roughly $30 billion of silver and silver financial instruments traded annually, violating U.S. antitrust law.

UBS AG was also named as a defendant. Investors accused the Swiss bank of conspiring to exploit the Silver Fix, though it did not help set the benchmark....

Read the entire article here.

Gold and Silver Daily Trading Patterns For November 2015

Does anyone see a marked daily pattern in the precious metals for the month of November?

What a surprise!


These charts are from Nick Laird at goldchartsrus.com

Gold Daily and Silver Weekly Charts - Non-Farm Payrolls Next Week - Tail Risk Warning

Gold just will not give us a signal to buy for the short term here yet.  So I remain sitting tight on all my long term positions.  Same with silver.

I did buy a little short side on stocks themselves today.

The action in the precious metals the past few days seemed exceptionally artificial, and that is saying a lot in these markets.

I suspect some of this was end-of-month shenanigans.

The December gold contract is a fairly significant force, and we should start feeling its effects sometime in November.

The Bucket Shop warehouses showed a little more gold passing to the house account at JPM,  and the usual slow leakage out of the silver stores.

The 'nested W' bottom formation is off the table, and now we are in the uptrending range trade, if that can hold as shown on the first chart below.

It has been a long time since we have seen any kind of chart formation working.  This is not a surprise given the obvious price manipulation in gold and silver, similar to what we have seen in so many other markets including the forex which is a cousin to the metals trade.

A Russian bank has joined the Shanghai Gold Exchange, which continues to move impressive amounts of gold bullion from various sources, especially Switzerland and London, into China.

As I have noted previously, the completely new phenomenon of spiking leverage with paper over physical gold in New York and London coincides with the attempt to take the price down after its increase in the most recent leg of the bull market.

I am inclined by what I can see to think that unless the exchanges and the regulators get their act together and rein in the big bullion traders and the mispricing of risk that they are going to have a real mess on their hands if these high levels of leverage get forcibly unwound.

I think the facts bear this out, despite the 'down your nose' scoffing at any risks by apologists and insiders.  But that's just my own opinion, and I doubt anyone involved in the money flows from this trade will care.  And if it does fall apart, 'no one could have seen it coming.'

As Kyle Bass pointed out, no one with a fiduciary (or regulatory) responsibility can ignore what has happened in the gold market since 2013.  But some are, and with an almost reckless disregard.

Let me be clear, since one of the tactics that the apologists use is to purposely misconstrue any warnings.   I am not concerned about a 'default' on the exchange, in the form of a failure to deliver.

Rather, I am saying that the factors that effect tail risks are now so extended in the gold market that even a relatively small imbalance or exogenously driven spike in demand can result in a market dislocation in price that will bring the exchange and perhaps some participants to their knees, and result in a global cascade of grossly mispriced counter-party risks.

Non-Farm Payrolls for October will be reported next week.

Have a pleasant weekend.

Thousands of Gold and Silver Futures Contracts Dumped at Market Open

This calculated slamdown was a little enthusiastic even by current market standards, or lack thereof.

About seven thousand gold futures contracts, representing 21.8 tonnes of paper gold, were dumped at market in less than one minute driving the price down to $1,080.

Several thousand contracts were bought back in the following two minutes.

No legitimate profit-oriented sellers would operate in this manner, since they are selling against themselves.  You do not dump large volume without limit into a quiet market unless you are trying to disrupt the price.

A similiar operation happened in silver.

Who would suspect a thing?  Certainly not the regulators, or even some market 'reformers.' Not when something is so obvious.

Oh, well done.

Zerohedge thinks that it might be another HFT inspired 'flash crash.'

I think this is another conveniently timed, clumsy attempt to clear out more of the August open interest and give a nice shot to the gut for any foolish enough to still buy options on the Comex. The next precious metals option expiry is on the 28th July.

Silver: Short Term, Longer Term, In Relation to Equities and Gold

“If you shut up truth and bury it under the ground, it will but grow, and gather to itself such explosive power that the day it bursts through it will blow up everything in its way.”

Émile Zola

Never buy something just because it has declined from a high.

If a principle is fundamentally sound and remains so, then there will be an inevitable reversion from any extreme high or low, back to a primary trend. 

Silver may present an outstanding opportunity. 

In the short term silver is coiling, and is deeply oversold relative to stocks.   It is even out of balance with gold.

But longer term it still remains in a bear market.

Timing and patience are everything.

Butler: J'Accuse - Market Rigging in the Wheat Market, and in Silver

 

"What is truth? said jesting Pilate, and would not stay for an answer."

Francis Bacon

This is an excerpt from a much long article posted by Ted Butler at SilverSeek here.

I read Ted's columns each week at his subscription site.  I am glad that he was kind enough to make this one public.

There was little mention in the media of the case against Kraft, which was caught rigging the wheat market.   The parallels with other instances of market rigging are noted by Ted, and he asks the obvious question, 'Why the selective enforcement of the laws?'

Indeed.  It may have quite a bit to do with the credibility trap.  Once bureaucrats and politicians get involved in dirty dealings, their co-conspirators have often used the threat of disclosure to take them along for a much longer ride.  And it is easy to rationalize official silence in the face of injustice for the sake of careers.  And then leave office and take a high paying sinecure with the very industry that they had been paid to oversee.

 

When the precious metals markets dislocate, or 'blow up' in the vernacular, the economists and other very serious hypocrites will say that no one could have seen it coming.   Or blame it on some unrelated scapegoat.  Or crazy misguided goldbugs.   The same way they tried to blame the financial collapse following the housing bubble on the government and homeowners.  No one can see anything in this kleptocracy.

 

And they are right.  You can't see anything coming when you keep averting your gaze and closing your eyes to it.

 

An Unavoidable Comparison

Theodore Butler

April 7, 2015

"Importantly, the Commission’s case against Kraft most likely came as a result of a complaint from a disgruntled insider who was damaged by Kraft’s futures market activity and not as a result of widespread complaints or damage to the public. To my knowledge, this was not a case publicly discussed prior to the charges being filed. Compare that to silver, where many thousands of market participants and observers have petitioned the agency for years about the manipulation by JPMorgan and where investors and silver producers have been and are being damaged by artificially depressed silver prices.

The unmistakable conclusion is that this agency is bought and paid for or otherwise not acting in the public’s best interest. For a federal agency, I don’t think there is a more serious allegation.

So the real question is why the selective prosecution of the law? Why is the CFTC going after Kraft on a complicated case with an alleged payoff that looks like chump change (around $5 million total profit to Kraft), when public data indicate JPMorgan shorts the silver market whenever prices rise to cap and drive prices lower in order to profit on those short sales and accumulate silver at unfairly low prices; with JPM’s cumulative illicit take running into the hundreds of millions if not billions of dollars?

I can see the agency going after Kraft, but I can’t see any legitimate reason for it not to go after JPMorgan for the far more egregious silver activities the bank is involved in. Worse, why won’t the agency explain why the public data doesn’t point to JPMorgan doing what I allege the bank is doing? Can the Commission refute that JPMorgan has been the big concentrated short seller in COMEX silver futures since acquiring Bear Stearns in early 2008 and has been accumulating physical silver while remaining short COMEX futures for the past four years? That’s the key, no one - not the CFTC, not JPMorgan, not the CME – can offer a reasonable explanation for JPM’s control and manipulation of the silver market and what has transpired these past seven years...

The problem with selective enforcement of the law is that it undermines and makes a mockery of the whole system. It is a betrayal of the highest order. Yes, I’m fairly sure that the free pass to JPMorgan to allow it to continue the silver manipulation was given by Treasury and Federal Reserve officials to preserve market order and was considered to be to the public’s benefit. But look at what it has morphed into seven years later – a market more distorted than ever before and in which JPMorgan has amassed the largest hoard of silver in history."

Nine Out of Ten Non-Regulators MIght See a Trend In Intraday Precious Metal Trading

'What is truth?' said jesting Pilate, and would not stay for the answer.

Francis Bacon

Here are the intra-day averages for the price of gold and silver for February.

 

Can you detect any pattern intraday? 

 

There does seem to be a pronounced pattern associated with the geographic location of the primary trading market's time zone.

 

As the dissembling Winnie the Pooh said to the angry nest of bees, 'I'm only a little black rain cloud,  pay no attention to me.'

 

Tut tut, looks like rain.

 

Storms gathering on the horizon.  Better get more buckets for the bucket shop.

 

 

Charts courtesy of Nick Laird at Sharelynx.com.

Gold And Silver Divergence: Enter the Dragon

After beating Chuck Norris like a rented mule.

Most people who follow these things are aware of the remarkable expansion in open interest on the Comex in silver contracts during this price decline.

This is unusual because more often open interest follows prices, as metal bulls open contracts with buying or close them out with selling.

Gold is following the more conventional decline.

But on the other hand, we have silver inventories increasing remarkably in the 'transparent holdings' which Nick Laird, data wrangler, tracks for us.   Nick has some of the best collections of regularly maintained charts around.

And gold inventories have continued to be drawn down.

One might say that physical gold is disappearing, and silver is being overwhelmed by paper selling.  You could conclude other things of course.  And that is part of the problem with the opaque NY-London markets, so many of which have been revealed to be rigged.

I emailed my friend Dave last night and said, 'I think with this overnight plunge to 1183 the bottom is in, with a possible retest.'   Let's see if that holds.  It certainly is oversold with record short interest in gold.

One of the reasons it feels like a bottom, besides horrible sentiment,  is because the usual suspects and shills have been slithering out from under their rocks to spread their gloom, for their own books and for some of the funds as well I suspect.

China comes back from its holiday this week.  And they are not happy about alleged US interference in the Hong Kong demonstrations among other things.

As you may know one of the big rumours is that a deep pockets long is holding quite a few December silver contracts and refusing to fold them against downward price pressures.  The most frequently heard name is China.  There are a number of motives attributed to this.

Since the markets are opaque we can only guess.  I am keeping a close eye on the fundamentals, as I think the technical measures on the US markets are dodgy to say the least.  The Banksters have their fingerprints all over these markets, and there are too many odd things going on to make a reasonable person confident in their integrity.

Of course only about 1 out of 10 Americans bring a reasonable skepticism to these matters.  So for now the bullion Banks are having their way.  Not so with the rest of the world, however.

Do you feel a marked friction between the US and Russian/China and a few other nations?  Those I believe are the manifestations of the ongoing currency war, which is another name for the strain of a continued supremacy of the Imperial Dollar as the measure of value and primary basis of international exchange.

The times they are a-changing.

 

Gold Silver Ratio and Some Thoughts On Markets

Fear Us!

As you may recall, silver is more volatile than gold.

That means if the two metals are moving in the same general directional trend, as they are often wont to do, then silver will be moving faster and further in that direction than gold.   Silver has a higher beta.

So when one considers the gold/silver ratio, one is perceiving the 'spread' between the two.  In general, at the extremes, the spread between gold and silver will widen and narrow markedly as compared to itself over time.

We are at such an extreme now. Sometimes these merely signal short term tops and bottoms. And sometimes they signal trend changes.

In addition to the volatility differences, there are a few others.

Silver has a greater industrial usage than gold. So it corresponds more to the general trend in base metals.    Further, gold is perceived as more of a 'safe haven' than silver.  Gold is more purely 'money' than silver.  Silver is also more often a byproduct of base metal extraction.

All other things being equal, gold will be a more reliable store of value in times of crisis, but silver, once the crisis is past, will begin to overtake gold and recover more quickly.   Holding silver with leverage, given its already volatile nature, can be a real sleigh ride.  I don't use it for investment purposes, merely for a quick flip, lightly and only on occasion.

So there are a number of variables to consider in this ratio. In the past I used to engage in fairly elaborate multivariate regression analysis of these things.  I am doing less of this technical price analysis now that the markets have become as they are.  Analysis without including Asian supply and demand fundamentals has become somewhat effete.

As I have remarked colloquially the other day, there is some 'weird shit' going on in the silver market.  I will probably have more to say about this in the days to come.  I am sifting through rumours and data.  I may pass a few along, just because they are so delightful, in the manner of a novel. 

And I cannot say enough what a poor measure of the demand and value of metals is to be found on the Comex. If you really consider now what it is doing and how it is doing it in the quest for 'price discovery,' it is about as relevant to the value of the precious metals as a private game of Liar's Poker is to the value of the US dollar.  

But while people believe, it does have power.  It is an unfortunate country whose prices are set in a poorly regulated casino. 

I firmly believe that the US markets have given way to a shockingly pervasive control fraud once again, which can be called The Big Skim.  And there will be consequences over time.

These schemes always seem to fail.  In their late stages their is more use of fear than fraud, until they become almost all stick and no carrot, and then they fail.   And their failure has few fathers, but an abundance of orphans.

Mr. Cohan Responds On His Silver Rigging Exposé - Two US National Publications Refused the Story

"We run carelessly to the precipice, after we have put up a façade to prevent ourselves from seeing it.”

Blaise Pascal

This is starting to make more sense. 

Apparently Mr. William Cohan, a highly respected journalist, did look at all the relevant information he had been provided, and decided to write a story about rigging in the silver markets.

It was submitted and refused by at least two US publications which refused to run it.

Based on past history, one might assume the two national publications that refused to publish it were on the order of The New York Times, and perhaps Bloomberg News or even possibly Forbes.

The actual reasons that they gave for refusing to publish the story are not stated. One can assume they were not sufficient for Mr. Cohan to decide to take his name off of it in his professional judgement, so we can only surmise. 

So we cannot tell if this was editorial scruples, a failure in fact checking, or just good old fashioned minding of one's place.

Insiders never speak ill of insiders.

Bill was good with publishing the piece at ZeroHedge with his name on it.  So he apparently still had confidence in what he had written. 

 

That speaks volumes. 

At that point the whistleblowing parties, if one might call them that, deferred, feeling perhaps that printing something like this on the web alone, even on a large and widely read site, would relegate it to something easily dismissible by the status quo.  The Very Serious Players choose to read only properly vetted, fully credible and approved mainstream sources.

I am being a bit sarcastic, but not so much.  The thought leaders and ruling class in the US are, alas, out of touch almost without regard to their origins. And one does not have to think too hard about it to discover why.  They only read the right publications, watch the right shows, talk to the right people, say the right things, and think the right thoughts.

They live in virtual palaces and bubbles of ease and influence.  To borrow a phrase from one of their less pliant pets, when they go out amongst the common people, it often resembles Prince Charles on a royal visit to Papua, New Guinea.   As George Orwell noted in his diaries, 'apparently nothing will ever teach these people that the other 99% of the population exists.'  

They exist, they just don't matter in the halls of power anymore.

I might have suggested some publishing options a little 'out of the box' like The Guardian or Der Spiegel.  Choosing publications that might be less beholden to the New York financial powers seems as though it could be a more fruitful course of action.  South China Morning Post, or even the Asia Times?  Radio Free America?

So there you have it. We have a story. And the mainstream media refuses to publish it. And there is some wrangling about where and when it might achieve adequate exposure to do some good.

To:  addressees

Thank you all for writing me regarding Andrew Maguire's story of alleged "manipulation" in the silver market. As you may know, I was approached 11 months ago by a PR representative of Mr. Maguire's who wanted to introduce me to Andrew and to his attorney Gordon Schnell, at Constantine Cannon, in New York. I found what Andrew had to say very interesting, especially so in light of a piece I had written in the New York Times about the silver market three years ago.  A Conspiracy With a Silver Lining

I wrote up the story and submitted it to a national publication in the United States, which decided not to publish it. I then tried another, national financial publication, which also decided not to publish it. I then abandoned hope that the story would be published.

About a month ago, Ned Naylor-Leyland contacted me and suggested that Zero Hedge might publish the story. I thought that would be a fine idea.

Unfortunately, Mr. Schnell did not like the idea of Zero Hedge, nor apparently did his clients. They also declined to approve the use of key facts and key quotations that I felt needed to be included in the story to give it credibility. Part of my agreement with them was that they would be given quote approval and without their approval, I could not use their quotations or their information.

They did not approve. At that point, without their cooperation, I did not feel the piece could be published. I explained that to Mr. Naylor-Leyland but he didn't seem much interested in those facts and then went on to encourage the publication of the piece to which you are all responding.

All of which is to say, you are directing your passion to the wrong person. If you want the piece published, you need to reach out to Mr. Maguire and Mr. Schnell.

Thank you for your interest and your passion on this topic.

William D. Cohan

Related:  Ned Naylor-Leyland Suggests Media Overhanging an Exposé of Rigging in the Silver Markets

Asked and Answered: Some Thoughts on Leverage Unwind in the Great Gold and Silver Frauds

The Story

Bloomberg (and The Financial Times et al.) are positing that the scandal in the contracts tied to the price of gold in China is depressing the price of gold now. Is this true?

China Finds $15 Billion of Loans Backed by Fake Gold Trades

By Bloomberg News

Jun 26, 2014

China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities financing deals.

Twenty-five bullion processors in China, the biggest producer and consumer of gold, made a combined profit of more than 900 million yuan from the loans, according to a report on the National Audit Office’s website.

Public security authorities are also probing alleged fraud at Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as collateral for loans. Steps by the Chinese government to rein in credit by raising borrowing costs in recent years created a surge in commodities financing deals that Goldman Sachs Group Inc. estimates to be worth as much as $160 billion...

The Question

Q:   If something is collateralised more than it exists, how does it become excess versus in short supply?

A:  It's bearish because it's convenient to certain parties who see an opportunity in it?  lol

In all seriousness, I do think one can get a temporary move in the paper price of a commodity like gold or anything else, because in their fear investors start dumping and unwinding their paper positions based on some question of fraud.

The question an objective inquiry must frame is, 'Was the demand itself false, or the means of supplying the demand a false alternative? '  In other words, what is the essence of the demand, and what are the incidentals, or accidents.

In a situation where a fraud is exposed, you can get an excess of 'supply' of gold related instruments from those who wish to sell, against a deficit in 'demand' for that class of instruments because people doubt the veracity of the instruments themselves. You get a temporary break in demand from a disruption in market transactions. 

How do their liabilities match up against proven assets?   In a case like this any affect on the price of the assets is generally a very short term phenomenon, not unlike the withdrawal of the tide in advance of a tsunami. 

Perhaps an analogy would be if the integrity of some instruments such as GLD or SLV was brought into question. What if it was determined that due to counterparty claims and sloppy accounting the net asset value of GLD was called into question?  GLD would fall into a deficit against gold of course.  It would have an excess of liabilities over assets, and the market would adjust that.

There may even be an overadjustment, and ironically GLD might liquidate some of its real assets that had been in short supply.  And in the very short term a break in the demand for GLD might trigger a share liquidation that could also depress the price of the underlying commodity, at least temporarily, depending on how large a market force that GLD had been on marginal demand.    

Remember that current price can be set very much at the margins in the short term, depending on how inefficient a market may be and the shelf life of the commodity.  This is often forgotten when people consider the nominal size of a market, and use that as a reason that it cannot be manipulated because of that sheer size.  What they often conveniently forget is that price is set at the margins, and it is the marginal size of the transactional market that is important, involving other factors like seasonality, shelf life, and the efficiency of perception of the future. 

Was gold moving higher in price because people wanted to own GLD in and of itself, or were people buying GLD because they wanted exposure to physical gold, and GLD happened to be one vehicle of choice?  In other words, what was the essential driver of demand?  We ought not to expect the market to answer that question efficiently in the very short term during a sudden exposure, when the first impulse is to liquidate back to some form of certainty.

Now that does help to enlighten this in some ways.  Why are these Chinese instruments not just falling into a deficit against physical gold, but apparently driving the price of gold itself?   Firstly, I question the premise stated by the mainstream media itself, since their analysis of the underlying factors of markets in the daily headlines is notoriously driven by biases.   But let us assume that this is correct and that this is affecting the gold price more than, let's say, the headlines in Bloomberg and the Financial Times. 

Since these Chinese paper contracts are in a great deficit in assets, they might not have been a major source of actual intended physical demand, but rather an alternative manner of referencing that asset class.  They certainly are larger than the frauds involving commodity assets at MF Global, for example.  Let's just say they are not inconsequential.   

The Chinese were not tying contracts to gold because they wanted the contracts that happened to involve the delivery of gold.  They involved gold in the contracts because the gold was something that they trusted, above and beyond the contracts.  In other words, they were a kind of risk abatement.  Gold was an 'external' good, without contingency to the contracts.  Rather, the contracts were contingent upon gold.  And when that contingency was exposed to unexpected risk, an unwind was triggered in a form of sudden market revulsion to the contracts, with some measure of collateral damage (pun intended).

The price of gold as it is now determined largely in the West is divorced, almost shockingly at times, from the fundamentals of supply and demand in the real world.  One only has to look at the leverage at the Comex and the LBMA to get a sense of it.  In the case of gold this is also driven by the willingness of large holders of gold, including central banks and some funds, to lease their assets into the market and incur counterparty risk at market distorting prices. 

By the way, I now believe that the big short squeeze in the metals last week was tied to word of the unfolding collateral scandal in China.  You had best believe that market participants are watching this closely.   There was a significant amount of nervous short covering.

As we have seen in the past, during periods of change in the global currency regimes, there may develop two markets: an official paper market that prints the headline price, and a private market that prices physical bullion in bulk trades with a transfer of real goods occurring with negotiation.  Only the retail individual is tagged with the official rates.  I had great first hand experience with this during the fall of the Soviet Union, especially in Prague and Moscow.

Interestingly enough in the case of silver the central banks are not large holders of stores of that physical metal, so any faux supply must derive, as some suspect, from mass naked shorting by market makers and speculators.  This may provide some extra force to the eventual price adjustment, even in this age of wristslap fines for egregious fraud.

I would hazard a guess that to the extent that these fraudulently leveraged instruments did not involve the delivery of real bullion on demand, that they may set up a temporary distortion in the market, even to the downside, that will set up a major rally in price once the fog in the market clears, and traders and investors understand what they are really holding. This could hold true for these Chinese contracts, and even contracts at a major Western exchange.   Liabilities, once they settle in the unwind, will be resolved with the underlying assets.  The honesty in the market will determine the manner and speed of the settlement.

This is a scenario that seems to be occurring to some small extent in gold now, and is set up to occur in silver.   The actual moves will occur when transparency is brought to the market, generally through some 'trigger event' that in itself may not be of a consequential magnitude, like a parting of clouds 'brings the dawn.'  The sun was always there, but the clouds of mist disguised it.

The divergence between paper and physical markets also has highly corrosive longer term affects. The manipulation of prices can often cause systemic underinvestment in the production of supply. Once that manipulation is exposed, and the true state of supply and demand without the mask of leverage is realized, prices will adjust accordingly, and sometimes with a significant force.

The adjustments may be of such a magnitude that the governments and exchanges will force settlements with other assets like cash, where they may.  As the bad money drives out the good, any such moves will further propel investors into safe havens, and could be a period of much uncertainty.

There are certainly other ways of answering and interpreting this. I will offer no criticisms since there is room for differences. But in general when those answers are accompanied by ad hominem attacks and insults, obscure reasonings and resort to technical jargon, they are often falsely biased by either ignorance or intent. I have read some rather tortured explanations for things from some surprisingly well placed sources, and some with seemingly impressive connections to the industry and credentials which they wear proudly, as a support for their puzzling opinions that seem to violate common sense and the facts at hand. Such are the times.

 

Anti-Gold Scare Tactics Seem To Be Largely Ineffective

I have seen the most recent surveys in Asia that show the appeal of gold as a store of wealth, but I had not known of similar results elsewhere.   I also think that physical silver is enjoying some strong interest that is barely mentioned.

The propaganda of the Western banks and their friends at Shill & Troll seems to be almost as heavy handed and fairly obvious as their trading tactics of dumping large numbers of contracts to see at market in quiet periods. 

They are free have their way in their phony, rigged markets, but perhaps the old saying from Abraham Lincoln really holds true:  You can fool all of the people some of the time, and some of the people all of the time, but you cannot fool all of the people all of the time.

Press’ anti-gold scare tactics largely ineffective
by Michael J. Kosares

Gallup poll ranks gold second best long term investment after real estate

Under normal circumstances, I might let a rutty headline about gold in the Financial Times pass without much notice. I say “rutty” because the Financial Times has long been stuck in a rut as one of the principle apologists for Keynesian economics — big banks, big deficits, big governments and powerful central banks. It doesn’t think much of gold enthusiasts and gold enthusiasts do not think much of it. (Although I still read it every morning.)

When I took-in the headline — Bumpy ride in store for gold with price forecast to fall 15% — with my morning coffee, my first reaction was to disregard it, as I do most of the day-to-day, routinely negative Financial Times’ reports on gold. Scanning the article (with the hope some nugget of important information might be gleaned), something tugged at the back of my mind with respect to the entities referenced — Gold Fields Mineral Services (GFMS), Goldman Sachs and Credit Suisse. All three obviously were predicting 2014 would be a bad year for gold. What was nagging was their near-term record in the art of gold forecasting...

Read the entire article here.

Ted Butler: J. P. Morgan And Precious Metal Price Manipulation On the Comex

I am no legal expert, and therefore have no idea of the merits of this as a prospective case.  The law involves things like intent, opportunity, evidentiary proof, and so forth. Apparently one can sue another entity for just about anything, but that does not mean that the case has any merit.   And I certainly could not advance such a case based on even industry knowledge. That strikes to the heart of my own issue.

My primary concern is a lack of transparency. And that lack of transparency in these markets is not conducive to market efficiency.  It allows for gaming the system, either occasionally or, as we have seen, systematically.

I cannot tell if these markets are manipulated because so much of what is being done is hidden.  And it does not help that the CFTC conducted a five year long study into the subject, and then quietly killed it without ever having issued any information about their findings.

Some have shown evidence they say that proves that it is the tech funds that set price, and that JPM is just 'making a market.' If this is true, then additional transparency on the part of JPM and the other market makers would be perfectly reasonable to allay any doubts about the honesty and fairness of the markets for precious metals.  This is why the people have established, and paid for, regulators.  So they do not have to resort to lawsuits in order to achieve justice and equity in their transactions.

Considering the widespread rigging of key benchmarks and prices, I think to just dismiss these concerns with a sneer and a snigger is unreasonable, requiring people to maintain an almost slavish belief in the integrity of the Banks, trading desks, and the system.  Given the amount of abuse that has been exposed already along these same lines, that does not seem to be a thing that a thinking person would ask.

The major objection to transparency, by the way, is that it would diminish the profits of those in the position of market makers.  Well, market making is intended to be a utility function, with a small but regular return.  It is not appropriate for market making to be in the hands of those who are also major market players.  It is a certain invitation to corruption.

One of the more general things that struck home in this commentary by Ted is the concern that the Comex is becoming like a bucket shop, a betting parlor that is at arms length from the markets for which they are presumably setting prices.   The lack of delivery and the ability to create large amounts of contracts to receive or deliver on the fly, and then to transact them at whatever price you wish without seeming constraint if you are big enough, with deep enough pockets and enough advantageous information, is tantamount to setting up a con game, and then trusting in men to be angels.

Relying on self-regulation, under the discipline of private lawsuits, merely reinforces our increasingly bifurcated society, in which a small minority have ease and rights and freedom and even justice, because they can afford it.  And those many who rely on the justice provided by government will be faced with an upward facing and unresponsive bureaucracy, and with that, hard times.  Like quality Healthcare, there will be Justice, for some.

As you know I am no longer hopeful of change in the short term, given the nature of the credibility trap that has encompassed the political party process and the mainstream media. To paraphrase the discouragement pessimism of Czech author and political figure Václav Havel:

“No attempt at reform could ever hope to set up even a minimum of resonance in the rest of society, because that society is ‘soporific,’ submerged in a consumer rat race... Even if reform were possible, however, it would remain the solitary gesture of a few isolated individuals, and they would be opposed not only by a gigantic apparatus of national (and supranational) power, but also by the very society in whose name they were mounting their reform in the first place.”

It is no accident that the nascent movements for financial reform were either ruthlessly crushed, as in the case of the almost rudderless Occupy Wall Street, or co-opted by money and politics, as unfortunately happened with the Tea Party. Co-opt if you can, crush if you must.

Ted presents some of the facts in the contrary case, and I found them to be interesting.  It is hard to believe that the London Fix is so corrupt, but the Comex, which is the major pricing platform, is pristine, since the players are playing across all global markets.

Suing JPMorgan and the COMEX
Theodore Butler|
March 21, 2014

I’ve had some recent conversations with attorneys who were considering class-action lawsuits regarding a gold price manipulation stemming from reports about the London Gold Fix. I told them that while there is no doubt that gold and, particularly, silver are manipulated in price, I didn’t see how the manipulation stemmed from the London Fix. I wished them well and hoped that they may prevail (the enemy of my enemy is my friend), because you never know – if the lawyers dig deep enough they might find the real source of the gold and silver manipulation, namely, the COMEX (owned by the CME Group) and JPMorgan.

So I thought it might be constructive to lay out what I thought a successful lawsuit might look like, although I’m speaking as a precious metals analyst and not as a lawyer. I’ll try to put the whole thing into proper perspective, including the premise and scope of the manipulation as well as the parties involved...

Read the entire article for free here.

Top German Regulator Says Currency and Precious Metal Rigging 'Worse Than LIBOR'

The 'free markets' are permeated by frauds, many of them perpetrated by the Banks, which affect the price of transactions in liquid markets.  

What a surprise.

Did someone forget to offer Frau Koenig a post-government job in Private Equity?

In fairness, I can definitely see this managed as a 'limited hang out' public relations operation with some fines put forward for front running the London fix, but the great bulk of the abusive price rigging in the futures markets left untouched for confidence and the 'good of the system.'

I think the real issue will be the unfolding inventory scandals if they lose control of the great shell game.

Bloomberg
Metals, Currency Rigging Worse Than Libor, Bafin Chief Says
By Karin Matussek and Oliver Suess
Jan 16, 2014 2:04 PM ET

Germany’s top financial regulator said possible manipulation of currency rates and prices for precious metals is worse than the Libor-rigging scandal, which has already led to fines of about $6 billion.

The allegations about the currency and precious metals markets are “particularly serious, because such reference values are based -- unlike Libor and Euribor -- typically on transactions in liquid markets and not on estimates of the banks,” Elke Koenig, the president of Bafin, said in a speech in Frankfurt today.

Koenig is the first global finance regulator to comment publicly on the investigations as probes into the London interbank offered rate, or Libor, expand into other benchmarks. Joaquin Almunia, the European Union’s antitrust chief, said yesterday that its preliminary probe into possible foreign-exchange manipulation covers similar practices as in the regulator’s probe into Libor-rigging...

Bafin interviewed employees of Deutsche Bank AG as part of a probe of potential manipulation of gold and silver prices, a person with knowledge of the matter has said in December. The U.K. finance regulator, the Financial Conduct Authority, is also reviewing gold benchmarks as part of its wider investigation into how rates are set...

Read the original article here.

Ted Butler: 2013 – The Year of JP Morgan in the Precious Metals

Here is a very brief excerpt from Ted Butler's summary look at the precious metals market in 2013.

I find it interesting in particular because Ted watches all the Comex data closely, and builds his thesis on that.

Although his commentary is normally by subscription, he has made the entire piece for free here.

As a bullion bank and market maker JPM may have some explanations for what they are doing, and it may be perfectly innocent. If they provide them to the CFTC, I think it would be something that could well be made public.

I do not mean to be rude, but a mere reassurance that they are doing no wrong is hardly sufficient, given the many recent instances in which they have been found to be doing things that are wrong, even if they are able to settle them for money and technically admit no guilt. I believe Matt Taibbi recently referred to them as "a global criminal enterprise."

But the CFTC makes an unresponsive silence their usual policy on far too many market particulars. And that undermines market confidence. And it is an arrogance of government power that makes it clear why only a small minority of people have a favorable view of the current government in Washington for both parties.

The people should be able to have confidence in markets for them to operate efficiently, and it is the role of government to provide this oversight. This is what they are paid to do, and the taxpaying public, not the Banks, are their customers.

And that may be at the heart of our dilemma, a credibility trap. No credible action will be taken to reform because the excesses and abuses implicate the power elite, and their courtiers and enablers.

"From the very beginning of the year to the last two days of 2013, JPMorgan has dominated and controlled the price of silver and gold. Here are the documented facts. At the start of 2013, with gold at $1650 and silver at $30, JPMorgan held short market corners in COMEX gold and silver futures. JPM was short 75,000 gold contracts (7.5 million oz) and 35,000 silver contracts (175 million oz).

JPMorgan’s short market corners at the start of 2013 amounted to a 21% net share of the entire COMEX gold futures market (minus spreads) and an astounding (but typical) 35% of the entire COMEX silver market. No single entity had ever held such outsized and anti-competitive shares of any important regulated futures market. It is unreasonable not to associate such extreme market corners with what followed in price."

The Amazing Disappearing Gold Bullion: Major Precious Metal Inventory Changes in 2013

The difference in the changes between gold and silver inventories is interesting.

I suspect that a great deal of the gold that has been lost this year has been repurposed to private ownership in China, the Mideast, and India among other places.

Although I do not show them here, Palladium and Platinum look much more like silver than gold.

Most of the conventional, off the cuff explanations do not seem to hold together under serious scrutiny.  Yes, silver is 'poor man's gold,' but Platinum certainly isn't.  And an aversion to paper gold, but not to paper silver? 

Gold seems to be somewhat different, even unique, with a large amount of physical inventory leaving the West.

Overall about 811 tonnes of gold have been withdrawn from inventory, while 1,434 tonnes of silver, 21 tonnes of platinum and 1.5 tonnes of palladium were added to these same types of ETFs and funds during 2013.

A remarkable short squeeze on gold bullion supply might occur if the price of gold breaks out, stimulating more investment in these 'paper gold' instruments.

The data for these charts came from Nick Laird at ShareLynx.com. 

CFTC Drops Probe of Silver Manipulation Takes No Action - Credibility Trap

I cannot say that I am surprised, since it was the safer thing to do, career-wise.  Pleading ignorance is the last refuge of the craven, be they bureaucrats or CEO's.

One might safely have little confidence in regulatory action in the US or the UK unless it is provoked by an unavoidable whistleblower or a noticeable financial crisis.   Or a divergence of interest among white collar crime families.

Although he made a show of action now and then, Gary Gensler is political, and fully a creature of the system.  The Republican members of the CFTC are 'free marketeers' who have generally impeded regulation of Big Money at almost every turn. 

Principles are not a career enhancing option in times of general cynicism and deceit.  

In fairness to the CFTC,  the credibility trap is far-reaching.  This is not a problem of a 'few bad eggs,' but a system that is largely given over to the corruption of the monied interests from what I have seen and read.  Mark Leibovich provides the colour commentary to the state of affairs in his recent book, This Town.

The manipulation of markets seems to be a fairly regular and long-standing occurrence.  But it is nice to at least have their decision on the record. 

Manipulation is no free lunch, and there are always consequences.  And they are usually not confined to one or two asset classes of wealth, but to a growing circle of abuse with much broader effects. I think Martin Niemöller had some insightful words on the subject.

Change will come, but apparently not yet.

Reuters
U.S. CFTC ends probe of silver markets, takes no action

(Reuters) - The U.S. Commodity Futures Trading Commission said on Wednesday it has closed its long-running investigation into complaints about manipulation in the silver markets, and is not recommending any charges.

The CFTC publicly confirmed the probe in September 2008. At the time, the agency had received complaints about whether the silver futures contracts traded on the Commodity Exchange Inc (COMEX) were being manipulated.

"Based upon the law and evidence as they exist at this time, there is not a viable basis to bring an enforcement action with respect to any firm or its employees related to our investigation of silver markets," the CFTC said in a statement on Wednesday.

Silver has featured prominently in modern commodity market scandals. In the most memorable case, the Hunt brothers of Texas hoarded the precious metal, aiming to corner the market and control global prices starting in the late 1970s...

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Read the entire article here.

Tonnes of Gold Removed From the Major ETFs and the COMEX Since January 1

Considering the theory that the purpose of this market operation was designed to take the price of gold lower since the first of the year, and to free up bullion to relieve certain stresses in delivery, I was wondering if we could quantify the results of it in any way.

With the help of Nick at Sharelynx.com, the keeper of records and master of charts,  I was able to calculate the approximate number of tonnes of inventory that were released into the market, or some private storage area perhaps, from the top funds and exchanges in the western world. The time period is from the beginning of this year through 26 June.

If this is correct, and the hypothesis is correct, then it is 'mission accomplished.'

There should be no excuses for not delivering Germany's gold.  And plenty of other bullion has been made available to solve those other pesky failures to deliver that seemed to be cropping up.

So one may presume that the bullion is in the mail to its rightful owners, in care of the Herr Weidmann at the Deutsche Bundesbank. The NY Fed sends its special regards.  Ich liebe dich.

Unless of course it has been rehypothecated to those barbarian buyers in Asia and the Mideast, yet again.

C'est la guerre des monnaies. Quelle dommage!

I have also included Nick's personal wave count for gold and silver, although I am not an adherent to the waves theory per se. And his long term confidence range for the gold bull market.

The stars seem to be aligning, with perhaps a few more antics and end of quarter shenanigans.  But boys will be boys, and they can't keep their hands off their toys.  So who can say what will happen next.  How about another round of bailouts?

Stand and Deliver: How Germany Disrupted the World's Gold Market

Someone asked, 'why would there be a desire to do a stealth confiscation of gold from the public holdings in ETFs and private stores through price manipulation?' Who could have been assigned the task of prying bullion out of the hands of the people, and for what conceivable reason? It appears to be happening, but why?

There are any number of possible reasons. Concerns that an innovative new round of QE and money creation might create a run on the gold price is one possibility. There should be little doubt in those who look into the evidence that central bankers are quite sensitive to gold and silver as alternative currencies and reflections of their own policy initiatives.

And that is quite possible. As I have pointed out, there is some precedent for it. In 1933 Franklin Roosevelt pulled back much of the publicly held gold in the US. And after this was done, the government revalued the gold from $20 to $35 overnight, and then used the gains to recapitalize the banking system.

Although this could happen again, it does not seem likely because it flies in the face of everything the central bank has achieved by putting the US on a purely fiat money regime, the last gold ties being severed by Nixon in the 1970s. They prefer to denigrate gold, even though they still hold it, and certainly speak about it quite a bit often through their intermediaries.

There is definitely a movement to revisit the Bretton Woods Agreement that established the dollar as the world's reserve currency. The BRICs, whose economic power is ascendant, are seeking to establish a new currency for global trade that is owned by no single central bank or entangled in the domestic policies of no single country. And they wish to add gold and possibly silver to that mix. And they are in the process of acquiring substantial reserves to accomplish it.

The Anglo-American banking cartel is resisting this movement with all their diplomatic and political might. One of the sensitivities of the recent spying scandal leaks is the concern that they may be trying to obtain intelligence that could be used in these negotiations which are ongoing, very quietly behind the scenes.

But one has to ask, 'what set off the firestorm of price manipulation against gold that started at the beginning of this year?' Unless one is a shill, or naïve about markets, the market operation to knock the price of gold, and also silver, down is fairly obvious and heavy handed. They are not even trying to hide it. Traders do not dump hundreds or even thousands of contracts at market in quiet periods with any other objective than to take the price down. It really is that simple.

My initial take on this was that this was part of the 'price-setting' negotiation for gold and silver in the basket of currencies that the BRICs are developing. But that seemed a bit thin, unless it was seen as a 'last stand' against including gold and silver by making the argument that they were too volatile.

So I looked back on the chart for what I saw was the pivotal moment, and then checked the news and tried to find some event that may have served as the impetus for it. And the truth of it was staring me right in the face.

How remarkable is it that Germany, at the urging of their citizens and despite the objections of their central banks, has requested the return of its sovereign gold from its custodial storage in New York? And that the Feds said, no. You can't have it, but we will be in position to return your own property in seven years time.

What was up with that? Venezuela had recently requested its gold to be returned, and that helped to push the price of gold up to its all time high, because the request had obviously been floated before it became public knowledge.

So why couldn't Germany have the return of its own property for seven years?

Think about this. And perhaps what is happening now will become more clear. It is all a part of the credibility trap, wherein past actions of officials must be hidden in order to protect careers and ensure the orderly functioning of the status quo, even to its own eventual detriment.

Oh this is wrong? This is some weird theory? Well I admit that part of the problem is that we are left to guess what the central banks and the markets are doing with our money and property far in excess of what might be expected in democratic societies. This is the failure of regulation and oversight, and the corrupting power of big money in politics.

But, ok. If this is just some distraction, then give Germany back its gold, in full, this year.

If you wish to prove your word is good and facts are straight, give Germany back its gold.

And if you wish to restore some level of confidence in the markets, make them more transparent and open so people can conduct their business efficiently and safely without fear of being cheated and defrauded at every turn.

If you wish the trust and respect of the world, redeem what you have pledged to hold in trust.   If you have taken some actions in the past that were made in good faith and for good reasons, but may have gone too far or turned out badly in retrospect, make good on them now.   The way to stem a scandal is to bring the truth to light.  It is never the initial act that brings down government, but the subsequent attempt at coverup that obtains a life of its own.

Do the right thing even if it is not convenient, because it is the right thing to do. 

Prove your full faith and credit to be worthy.  Fulfill your oaths.  Tear down the wall of secrecy that divides the people from their government. End this before it can go any further.

Stand and deliver.

"Oh what a tangled web we weave when first we practice to device."

Sir Walter Scott

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it."

Sir Eddie George, Bank of England, in private conversation, September 1999

Physical vs. Paper: The Shanghai Gold Exchange vs. the COMEX

When push comes to shove, the COMEX is only pushing paper.

Weighed, and found wanting.

Shanghai Gold Exchange (SGE)

Weekly Gold Delivery From Vault

The above graph of physical gold delivery out of the Shanghai Gold Exchange (SGE) vaults was prepared by @KoosJansen based on the weekly reports from the Chinese portion of the SGE site. The SGE has confirmed these are deliveries from the vault and the numbers are updated on a weekly basis (each Friday). I will publish the links to the exact Chinese pages next week and will ensure there is updated weekly delivery data available here.

Monthly Physical Delivery From Vault: SGE Versus COMEX

The above graph of monthly gold delivery from vault demonstrates very clearly what many have expressed repeatedly on sites such as KingWorldNews -- the COMEX is a paper gold market while the SGE is quite clearly a world class market for physical gold.

Source: GoldMiner Pulse